easyJet secures £490m deal

22 August 2007
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23 August 2007 | Antony Barton

Buyers at easyJet have transformed its negotiation process to secure one of the airline's biggest procurement deals of the past five years.

The £490 million, 10-year agreement with GE Aviation for the maintenance and overhaul of the engines powering 224 aircraft was signed this summer. The first engine site visits will begin next year.

Sue Sizer, procurement manager for operations, rejected the terms and conditions provided by each of the final four bidders. Instead she told them the final stage of negotiations would centre on easyJet's own stipulations.

She said the terms and conditions provided by GE, Snecma, Lufthansa Technik and Pratt & Whitney were too conflicting because of their "different company outlooks and different cultures". The solution was to give an equal starting point for all the suppliers in the final negotiations.

"This didn't disadvantage suppliers whose contract may have been good in one way yet bad in another. Our needs were always at the centre of discussions, rather than what the suppliers wanted.

"It has set a different standard for negotiations of this size and will have sent out a strong message to the marketplace about how easyJet will do business in future."

Sizer added this was a novel approach for airlines and aerospace because the supply market is quite narrow and vendors have, until now, been able to dictate deals.

The firm's growth since its inception in 1995 meant procurement had sufficient power to bargain. It claims to be the fourth largest scheduled airline in Europe by passenger numbers and has a "robust business model and stable cost base".

Its eight-person procurement team manages an annual spend of more than £1 billion. Aside from aircraft and aircraft maintenance, purchases also include catering, uniforms, a carbon-offset project, simulator training for pilots and cabin crew training and recruitment.



SMaug2007

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